Copper Prices Retreat after Rapid Rise; Copper Scrap Suppliers Sell Actively [SMM Copper Scrap Weekly Review]

SMM News on September 4:

      Amid wild swings this week—where the most-traded SHFE copper contract rose first and then fell, broke above the 110,000 yuan/mt threshold mid-week before rapidly pulling back to 108,440 yuan/mt, and then stabilized at 109,170 yuan/mt—the price difference between copper cathode and copper scrap retreated from a high of 5,410 yuan/mt to the 3,329-3,435 yuan/mt range. The copper scrap market continued to face structural tightness this week, with elevated invoice tax rates and scarce compliant supply still serving as underlying constraints. Suppliers’ shipments pace fully tracked fluctuations in copper prices, and they imposed stringent requirements on payment terms. Issues remained unresolved, including low inventories of high-grade bare bright copper in Ningbo Zhenhai and other areas, as well as limited import replenishment. As September—the traditional peak season—began, the market saw key changes: after copper prices broke above 110,000 yuan/mt on September 1 and then quickly pulled back, many secondary copper rod enterprises increased their stockpiling demand for raw materials. Meanwhile, after copper prices rose, copper scrap traders sold off their holdings one after another. Sentiment among sellers and buyers warmed in tandem, with the sales sentiment index surging to an intraweek high of 2.92. Intraday transactions of copper scrap were relatively active, and the price difference between copper cathode rod and secondary copper rod once widened to 2,100 yuan/mt, underscoring that peak-season stockpiling and the economics of the price spread jointly stimulated purchase willingness. However, copper prices later retreated after rapid rise by 1,440 yuan/mt, and copper scrap traders quickly shifted to holding back from selling. Although secondary copper rod enterprises wanted to buy on the dip, suppliers were unwilling to sell their inventories at a discount. Market trading activity declined markedly, and the price difference between copper cathode rod and secondary copper rod consequently narrowed to 1,350 yuan/mt. This behavioral pattern of “selling when copper prices rise and holding back when copper prices fall” continued to reflect the supply side’s high sensitivity to prices this year.

       Toward the end of the week, copper prices temporarily stabilized. With a bullish view on copper prices, secondary copper rod enterprises actively purchased copper scrap intraday, and the purchase sentiment index rebounded to 1.83. Meanwhile, copper scrap suppliers held a considerable amount of low-priced material. Provided that scrap utilization enterprises could make payment within 3-5 days, traders prioritized deals with those that could pay quickly. This underscored that, against the backdrop of compliance constraints from reverse invoicing and a lengthened cash collection cycle, capital turnover efficiency and payment speed had become one of the core criteria for traders when selecting counterparties